[Recommended][ANSWERED] 1-1. Calculate the tax disadvantage to organizing a U.S.businesstoday after pass

1-1. Calculate the tax disadvantage to organizing a U.S.businesstoday after passage of the Jobs and Growth Tax Relief Reconciliation Act of 2003 as a corporation…

1-1. Calculate the tax disadvantage to organizing a U.S.businesstoday after passage of the Jobs and Growth Tax Relief Reconciliation Act of 2003 as a corporation versus apartnershipunder the following conditions. Assume that all earnings will be paid out ascashdividends. Operating income (operatingprofitbefore taxes) will be $500000 per year under either organizational form; the effective corporate profits tax rate is 35 percent (Tc = 0.35); the average personal tax rate for the partners of thebusinessis also 35 percent (Tp = 0.35); and the capital gains tax rate on dividend income is 15 percent (Tcg = 0.15). Then recalculate the tax disadvantage using the same income but with the maximum tax rates that existed before 2003. These rates were 35 percent (Tc = 0.35) on corporate profits and 38.6 percent (Tp = 0.386) on personal investment income.
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